US sees rising demand to export crude overseas

Oil companies will apply for government permits to sell crude overseas by 2015 and some may do so immediately, a report says. Shipments of refined oils such as gasoline, as well as liquefied petroleum gas, piped gas, and coal are now the same level as those of transport equipment.

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By ALARIC NIGHTINGALE

Bloomberg

Demand to export US crude is poised to soar as the
nations surging supply of hydrocarbons creates a glut
of the feedstock, according to Citigroup
Inc., the bank that predicted a slump in the nations
imports.

Oil companies will apply for government permits to sell crude
overseas by 2015 and some may do so immediately, Edward
Morse, Citigroups New York-based head of commodities
research, said in a report this week.

Shipments of refined oils such as gasoline, as well as
liquefied petroleum gas, piped gas, and coal are now the same
level as those of transport equipment, making hydrocarbons
the joint-largest US export, Morse said.

While the US bans most crude exports under decades-old laws,
a glut of the feedstock is adding pressure to
export it from the Gulf of Mexico, Morse said.

The nations refining hub has the capacity to
process about 1.5 million bpd more light, sweet oil and its
crude production has expanded by 1 million bpd in each of the
past two years, he said. Light, sweet grades are less dense
and contain less sulfur, making them useful for making fuels
such as gasoline.

The current crude glut on the US Gulf Coast will
continue to spark requests for crude oil export licenses and
a positive but restricted response is inevitable, Morse
said. Applications for exports should start to
soar.

The Citigroup analyst predicted in December 2011 that
Americas net oil imports would slump 60% by 2020
because of slowing consumption and rising production. The
nations net shipments at the time were 9 million bbl
and they averaged 7.8 million bbl so far in 2013, Energy
Department data show.

Brent-WTI

The surge in energy production is driving down crude costs
for USrefineries. West Texas Intermediate oil this year cost
an average of $10.15/bbl less than Brent, the international
benchmark. Brent cost an average of $2.16/bbl more than WTI
in 2003.

Oil companies may be able to export crudes where laws
governing such transactions arent clear, Morse said.
President Barack Obama can also allow shipments in the
national interest, the Citigroup analyst said. The Commerce
Departments Bureau of Industry and Security can also
license sales while there are signs that the US could allow
crude swaps with foreign suppliers, he said.

Venezuela, Mexico and Colombia all might benefit from swaps
of US light crude for heavy oils, Adam Sieminski,
administrator of the Energy Information Administration, the
Energy Departments statistical arm, said Oct. 29. A US
light crude swap for heavy probably wouldnt threaten
energy security, he said.

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